Designing compensation to operationalize compliance continues to be a vital and strategic topic for legal professionals. The shift towards incorporating compensation systems into a company’s compliance program is evident, highlighting the importance of alignment between monetary incentives and adherence to corporate compliance.
In a recent podcast episode, compliance expert Tom Fox discusses the perspective of the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) on this matter. Both authorities view the design of compensation structures as a powerful tool to bolster compliance efforts and reward employees for complying with the company’s program.
Fox’s key point of advice for compliance practitioners is to revise their current incentive systems to better match the objectives of their respective compliance programs. These revisions should aim to ensure simplicity, encourage immediate changes in behavior, and underscore alignment with broader company values. This shift in strategy acknowledges not only the pragmatic value of incentivizing adherence to programs, but also how closely linked these programs are with the integrity and ethical standing of the company.
The emphasis Fox places on simplicity and behavioral change is notable. These redesigned systems should not only carry clear and consistent messages regarding the importance of compliance, but should also facilitate the immediate adoption of compliant behaviors. The effectiveness of such a program lies not only in its ability to motivate compliance, but also in its ability to make compliant behavior an ingrained part of the corporate culture.
When dealing with the complex and dynamic landscape of corporate compliance, the message is clear: operationalize compliance through effective compensation structures, and reap the benefits of a more engaged, compliant, and ethically-aware workforce.